Question
Fabrication Holdings Inc. (FH) has been a client of KFP LLP for many years. You are an audit senior and have been assigned to the
Fabrication Holdings Inc. (FH) has been a client of KFP LLP for many years. You are an audit senior and have been assigned to the FH audit for the first time for the financial year-end June 30, 2022. During March 2022, you are completing the risk assessment for PPE, which is one of FHs most material accounts. You are also aware that FH has made a large investment in a new manufacturing process to place itself in a more competitive position. Your analytical procedures indicate an increase in acquisitions of PPE.
Answer the following separately:
1. What is the key assertion at risk for the PPE additions? Why is it at risk? Explain.
2. Identify the relevant substantive tests of details that would be appropriate to address the assertion at risk identified in the above part.
3. How would your answers to the previous questions change if the PPE additions had been manufactured in-house by FHs engineers and toolmakers, rather than purchased?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started